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richard h. thaler

Richard H. Thaler, author of the ‘Nudge’ theory, awarded the 2017 Nobel Prize in Economics

Richard H. Thaler, professor at the University of Chicago, one of the founders of behavioral economics and finance, has been awarded the 2017 Nobel Prize in Economics for shedding light on how human weaknesses such as a lack of rationality and self-control can ultimately affect markets.

The 72-year-old, co-author of the 2008 best-seller “Nudge,” has “built a bridge between the economic and psychological analyses of individual decision-making,” the Royal Swedish Academy of Sciences said Monday.

“By exploring the consequences of limited rationality, social preferences, and lack of self-control, he has shown how these human traits systematically affect individual decisions as well as market outcomes,” the academy added.

His “Nudge” theory, outlined along with former White House adviser Cass Sunstein, suggests small incentives can prod people into making certain decisions. His work has informed politicians looking for ways to influence voters and shape societies at a time when budget deficits limited their scope to spend. Former U.S. President Barack Obama and former U.K. Prime Minister David Cameron both appointed teams to study if behavioral economics could be used to save their governments money.

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